Wednesday, December 14, 2011

The Gold Price Took a Beating Today, Down 4.6%, Gold and Silver Remain in a Bull Market

Gold Price Close Today : 1584.30
Change : (75.60) or -4.6%

Silver Price Close Today : 2888.10
Change : -231.4 cents or -7.4%

Gold Silver Ratio Today : 54.856
Change : 1.646 or 3.1%

Silver Gold Ratio Today : 0.01823
Change : -0.000564 or -3.0%

Platinum Price Close Today : 1420.70
Change : -54.10 or -3.7%

Palladium Price Close Today : 618.40
Change : -24.70 or -3.8%

S&P 500 : 1,211.82
Change : -13.91 or -1.1%

Dow In GOLD$ : $154.27
Change : $ 5.41 or 3.6%

Dow in GOLD oz : 7.463
Change : 0.261 or 3.6%

Dow in SILVER oz : 409.39
Change : 26.15 or 6.8%

Dow Industrial : 11,823.48
Change : -131.46 or -1.1%

US Dollar Index : 80.52
Change : 0.282 or 0.4%

Today was not a banner day for the GOLD PRICE and SILVER PRICE. Gold lost a massive 4.6%, $75.60, to close Comex at $1,584.30. Silver lost 7.4%, 231.4c, and shuttered Comex at 2888.1c.

End of the world? Well, some folks think so, but I've been living on the edge of a volcano for years, and I'm not ready to refugee yet.

If SILVER does not hold around 2900c, then there's very little to catch it between here and lateral support at 2615c, just a little bottom at 2843c. More likely is a drop to 2615c, quickly, or a grinding attrition down to 2000c or even 1715c.

Making some assumptions about silver's behaviour from end-September through last Monday gives me a silver target of 2700c -- if height of formation equals depth of drop.

Where silver will stop I don't know, but I've been whipped like this enough times in the past to know that exactly now, when the screaming enemy is pouring over the parapets and you are running out of ammo is the time you have to get plumb junk-yard dog mean, and make up your mind that you are not going to whine and lose your head. I lived through 2008, when silver dropped from 2067c to 880c, losing more than 100% of the preceding gain, and I saw it come back to 4850c.


It may delay, but watch for it. It will surely come.

The GOLD PRICE took a bad beating with a big stick today. High came at $1,641.25, but once it crossed below $1,620, bottom fell out, all the way to $1,558.35. We are getting near my most likely target, $1,535. I will surely close my eyes, bite my lip, and buy there.

The sort of heads-and-shoulders-y formation on the GOLD PRICE chart from end-September to early December -- if that's what it is -- gives a target of $1,546.

Everything I've said tonight aims to calm y'all down and fix your eyes on what is really important, the LONG TERM. I know the internet and the media and all the wise and big-shots in the world want to distract you with the last 2 hours and the next 24, but history doesn't rise and set on one day. GOLD and SILVER remain in a bull market. Count on that.

World is full of folks who like to kick a feller when he's down, and mercy, they're a-piling on gold and silver. Somebody sent me a quotation from the Great Dennis Gartman (at least, I'm sure he thinks he's great) about how the bull market in gold was over. Even had 20 year charts to prove it.

Ahh, think again. 20 year chart is useless here because it takes in the last half to the last gold bear market and the last half of the stock bull market. In other words, as cycles go it starts at the bottom of a sine wave and runs half way through, instead of showing from bottom to bottom or top to top, a complete cycle.

Gartman and the article quoting him made much of gold's gains against the dollar and stocks, as if that "proved" gold's bull market has ended. Sigh -- yes, stocks have lost 80% against gold, but they will lose another 80% before this ends. Right now about 7.5 oz of gold buys the Dow, down from 44.5 oz at the cycle top in August 1999. But returning to a whole cycle that topped in 1980, we find that the Dow bottomed at one (1) oz) of gold in 1980, 2 oz in 1934, and 1 oz in 1996.

Besides, none of the psychological indicators of a bull market top have appeared, like Gartman and every other guru touting that a "new era" has been reached where gold will remain at permanent high prices. Have y'all seen that in the headlines yet? I haven't.

Anyhow, fact is that while gold and silver are making a big correction, after huge rises that went before (2008 - 2011, $705 - $1,927 and 880c to 4850c), their bull market has not yet ended. Neither in price (now 7.6x vs. 1980's 24x for gold and now 12x vs. 38-2/3x for silver) nor in time (only 10 years so far, vs. 15 - 20 years) have silver and gold fulfilled their bull market promise.

Nor have the causes driving gold and silver up changed, unless central banks have announced "No more inflation" and governments have sworn off deficit spending. I haven't heard that yet.

But what do I know? I'm nothing more than a natural born fool from Tennessee, not one of them smarty writers from New York. Them fellows know everything, like John Corzine and Bernie Madoff.

Stocks dropped 131.46 points (1.10%) for a Dow close at 11,823.48. Once they broke that 11,950 support, only air loomed beneath. S&P 500 dropped 1.13% (13.91 points) to 1,211.82. Next stop is 11,600, etc., downward.

Yesterday the Dow cut through its 200 day moving average (11,942), today it touched its 50 DMA (11,774.54). Momentum clearly points in gravity's direction.

US DOLLAR INDEX rose again today, fueled by deflation fears and "the-world-and-the- euro-are-flying-apart" fears, up 28.2 basis points to 0.36%. This little rise alone accounteth not for the huge drops in stocks and metals, but it doth confirm yesterday's upside breakout. Y'all better get used to a rising dollar, cause it's gonna stretch its legs to 81.50, maybe 83.50, maybe even 88.70. Have I kept this, my expectation, a secret? Have I hidden this from y'all, when all them New York fellers were telling y'all the dollar was going to drop? I don't remember.

Y'all forget about the Euro. Broke 1.3200 support yesterday, and 1.3000 today. Closed down 0.38% to 1.2986. Will drop further and further. Look for 1.2000.

Japanese yen dropped 0.05% today to 128.18c/Y100 (Y78.02/$). Trading at the bottom of its 5 month range, but stubbornly clinging.

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger

© 2011, The Moneychanger. May not be republished in any form, including electronically, without our express permission.

To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down.

WARNING AND DISCLAIMER. Be advised and warned:

Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures.

NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps.

NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced.

NOR do I recommend buying gold and silver on margin or with debt.

What DO I recommend? Physical gold and silver coins and bars in your own hands.

One final warning: NEVER insert a 747 Jumbo Jet up your nose.